The overall look of both the phone and the software in this picture match up with prior images from noted tipster @evleaks. This newest image is reportedly from an engineering prototype of the Normandy, which is the alleged codename for the handset. It simply doesn’t make sense for Nokia to enter the traditional Android handset market with Normandy.

Instead, using Android to strengthen the company’s Asha phone line-up seems the likely play to me.

While Nokia took on Windows Phone as its primary smartphone platform in February 2011, a new Android line could provide the company with a platform replacement for its Asha line, which are limited, low-cost handsets sold in emerging markets built on Nokia’s aging S40 platform.

By replacing S40 with Android as the underlying platform to power the Asha line, Nokia can take advantage of Android’s wide usage and developer support. Nokia can customize the look and feel of Android, similar in approach to Amazon’s Kindle, while building in access to Microsoft’s software and services. Think SkyDrive, Skype and Office.

This approach would gain Microsoft access to hundreds of millions of additional users and do so through Android of sorts. Google’s platform could be the engine under the hood of such smartphones to provide more mature features than S40. It certainly doesn’t hurt that Google re-worked Android with KitKat, or Android 4.4: The new platform can run well on phones with as little as 512 MB of memory.

I’m still trying to wrap my head around app support though. Look to the Kindle as an example. Since Amazon uses the Android Open Source Project, or AOSP, version of Android it doesn’t provide access to Google’s services such as Gmail, Chrome and the Play Store.

That’s fine in Amazon’s case as it created its own email client and Silk Browser, not to mention it own application store. How Nokia would manage this — particularly with an app store that supports software written to run on Android — is still an open question.

Regardless of that, the strategy seems sound. Microsoft spent $7.17 billion on Nokia’s device business in September. As part of that deal, Microsoft gained the Asha brand, giving it a foothold into new markets.

It’s not likely that Microsoft can get easily get its software and services running on S40 devices but it makes no sense to abandon the brand. Instead, switching it over to Android gives the company a way to push Asha as a modern-looking, low-cost line as an entry point for Microsoft software. And when those Asha users are ready for something more robust, they can step up to Windows Phone in the future.

Why not use Windows Phone for the Asha line to begin with? It’s a valid question. But as Microsoft appears heading towards a merger of sorts between Windows Phone and Windows RT, it looks like the smartphone platform is going to need more horsepower under the hood, not less. Asha running Windows services atop a lightweight version of Android makes more sense at the entry level.